TASK: Explain perpetual and periodic inventory methods of recording merchandise inventory.
Record the following transactions in general journal in perpetual and periodic inventory methods.Give necessary working for cost of goods sold and ending inventory in support of your solution.
Jan 1, 2005 inventory on hand 1-1-2005 50000
Jan 5 Purchase of inventory for cash 100000
Jan 5 Purchase of inventory on account-terms 2/10,n/30 215000
Jan 5 Cost of transportation & freight 5000
Jan 10 Inventory returned to supplier 15000
Jan 15 Paid supplier in full after deducting 2% discount 196000
Jan 15 Sale of inventory on account-Cost 270,000-terms 2/10,n/30 324000
Jan 20 Inventory returned by buyer-cost 20000 24000
Jen 25 Received cash from account receivable less 2% discount 294000
Jan 31 Physical count showed inventory on hand-cost 101000.